I followed the instructions from here: http://nookdevs.com/NookTouch_Rooting
After step 13 (The nook should boot up normally) it reboots but it looks just like before. It again says "Read Forever", shows homepage with "New Reads" etc.

I am on linux, so I didn't do 'adb connect'. But shouldn't the screen look different after rooting?

Also youtube video http://www.youtube.com/watch?v=eFZVpCSRpeI explains it differently and claims that just booting with inserted SD card causes it to boot to android. For me it only comes to "Rooted Forever" with the SD card and didn't boot Android. So I copied uRooted as suggested by instructions, removed SD card and rebooted. But got the same look.

I went though this last week and really ended up nowhere I've been told that the problem was that I was running 1.0.1 upgraded nook. I don't know for sure, but I did get android installed, and "sort of working". But I was unable to switch apps or get back to the nook reader without reboots.

I ended up doing my best at a factory reset. First off by deregistering from the settings menu and then by holding the 2 page buttons after a power off. I'm still not convinced that all the android stuff is gone. If the little droid man pops up again I'll do the 8 restart routine.

I think that rooting is worthwhile, but I'm going to wait for a better version

I kind of figured this out partially and now got it working to some degree.
The problem is that instructions on nookdevs.com and xda-developers.com are totally different and they use different images. First one got me rooted nook but without graphics access to it, it looked like original nook. I could only connect to it with adb. The xda-developers instructions worked better for me and I got working android with markey app, skype, etc.

However, when I go to the original nook software to read books I often lose access to the android apps. Buttons on the right ("home" button, etc) just stop showing up. Also sometimes buttons to switch pages don't work (particularly when I click on the new book for the first time).

Reboot helps to gain access to android apps, but later this access is lost again.

In addition, you need to remap some page turn button to BACK button, otherwise it's hard to use android OS (you need to change files /system/usr/keylayout/TWL4030_Keypad.kl and /system/usr/keylayout/omap_twl4030keypad.kl using adb from the android SDK for that). Also this BACK button won't get you out of B&N reader. So it's better to use some good android reader app and forget about B&N apps altogether.

Also you need to remap HOME (N button) from the B&N menu to android home screen. I didn't figure out how to do that one yet.

After rooting Nook Touch gets much more functional, and the popular reader app Aldiko is better than the one that came with B&N firmware.